Charles Schwab Stops Purchases of Load Mutual Funds

As
of May 2, Charles Schwab clients will no longer be able to purchase Class A
Load mutual funds.

The
company said clients can still transfer in, custody, sell and elect dividend
reinvestment for these shares.

“The
move away from load funds has been a secular trend over the last decade or more
and Schwab has never been a significant player in this space,” the company said
in a statement to PLANADVISER. Contrary to news reports that suggest otherwise,
Schwab said its decision wasn’t triggered by the Department of Labor’s (DOL’s)
new fiduciary rule. “It’s a housekeeping move for a low-volume business that no
longer makes sense for us to administer given the breadth of our core mutual
fund offer and the reality that many firms now make their funds available
directly to retail clients on a load-waived basis.”

The company also
noted, “Load funds have never been part of our core offer—over the past two
years we’ve accommodated about 750 of these purchase trades, a tiny fraction of
our mutual fund business overall.”